January 7, 2019
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Washington Research Council: Our state's budget sustainability rules work -- when followed

As the Legislature prepares to write the 2019-21 budget during the legislative session that starts next Monday, the Washington Research Council (WRC) has issued a new report looking at two of the key pillars of Washington's budgeting process.

In the new report, "Washington’s Budget Sustainability Requirements Work When Followed," the WRC looks at the state's four-year balanced budget requirement and the constitutionally protected rainy-day fund, both of which were created to promote responsible, sustainable budget-writing and protect against budgetary gimmicks.

The WRC writes: "Washington’s four-year balanced budget requirement and constitutionally-protected rainy-day fund promote state budget sustainability. The requirement that budgets balance over four years helps to limit the use of budget gimmicks and to prevent unsustainable bow wave spending. Reserves improve sustainability by providing a cushion for emergencies and limiting major program cuts during economic downturns. Because the rainy-day fund is protected in the constitution, deposits are mandated, and withdrawals are limited."

Still, the WRC notes, the Legislature plans to withdraw nearly $2.1 billion from the rainy-day fund for the remainder of the 2017–19 budget cycle that ends June 30. On top of that, it diverted $711 million before it could even be put in the fund in order to avoid the limits on withdrawals. That set a bad precedent that Gov. Inslee has already attempted to repeat, the WRC writes.

"By making these withdrawals, Washington is less prepared for a recession, should one occur in the next biennium," it warns.

The overall conclusion of the report is that Washington has made important strides to improve the budget's sustainability -- but although the Legislature has followed the letter of the law, it hasn't always followed the spirit.

Even worse, there have been suggestions that the four-year budget rule should be scrapped. While that rule makes it more difficult to balance a budget, it also provides a useful check against "bow wave" spending.

For more information on tax and budget issues, contact AWB Government Affairs Director Clay Hill at 360.943.1600.

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